WS1681: Revolutionizing Real Estate with NFT’S | Ori Ohayon

In this episode, our guest Ori Ohayon discusses the importance of the mantra "failure isn't final" and the resilience required to succeed in the NFT space. He talks about how he has failed many times in his life and career but has always gotten back up and kept going. Ohayon believes that mental resilience is crucial to success and that taking hits and being told no without giving up is essential. He also quotes Winston Churchill: "Success is what happens when you go from failure to failure without losing enthusiasm." Ohayon emphasizes the importance of perseverance and the willingness to keep trying even in the face of setbacks.

Quotes

• Would you anticipate that an ancillary effect of this would be to drop the cost of title insurance because it's going to be easier to ascertain what's on the title?
• We've created a straightforward business model that promotes adoption.
• Our business model is predicated on the fact that you can make that transition on an individual title basis cleaner, and smoother than a regular transaction leaving the title in the antiquated system.
• But because of that, I think it's got much more capacity for innovation.
• I think the biggest risk is going to be regulatory.
• It's at least five years before it even gets looked at on that scale.
• Success happens when you go from failure to failure with no loss of enthusiasm.

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Transcript

WS1681: Revolutionizing Real Estate with NFT’S

Ori Ohayon  we're spending a ton of time and money on title searches, lean searches. By putting all that information on the blockchain, it's now all transparent. It's all been tracked there and it can't be cheated on. They can't be hacked. By doing so, let's say you come and try to sell your house to me. I can go on the blockchain or let's say the new equivalent of what an MLS would provide and I can actually verify that you, Sam, are the owner of this house. You've owned it for five years. You bought it at this price from this guy and I can track all the conditions since then.

Welcome to the Real Estate Syndication Show. Whether you are a seasoned investor or building a new real estate business, this is the show for you. Whitney Sewell talks to top experts in the business. Our goal is to help you master real estate syndication and now your host, Whitney Sewell.

 Sam Rust This is your daily Real Estate Syndication Show. I'm your host, Sam Rust. Joining us today is Ori Ohayan. Ori has a long career in capital markets and fintech and then pivoted and became the NFT head for the Metaverse Group, leading NFT tech and business development initiatives and pioneering Web3 advances for the securitization and transfer of both physical and digital assets. Ori is set out to bring the digital world into antiquated sectors, constantly working to bridge the gap between the real world and the blockchain, focusing on creating investment-grade digital assets that are accessible by the masses. Ori, welcome to the show. Thanks for joining us today. Thanks for having me. Appreciate it. As I was preparing for this interview, Ori, I noticed that on the header of your LinkedIn page is this quote, courage is going from failure to failure without losing enthusiasm by Winston Churchill. You're in the NFT space, which necessarily is going to bring about some failure. It's definitely been one of the bigger boom bust cycles that we've seen in recent history. Why that quote? What does that quote mean to you and why do you have that on

Ori Ohayon  your LinkedIn header? It's a really good question. I think that goes very far back, obviously. For example, I grew up in England. I was born in Paris. I moved to Toronto when I was like 17. I didn't necessarily take the most linear path through life. I've bounced around. I've hit my head against brick walls many times. The one thing I think it told me when I got into a professional environment was failing isn't final. No matter how many times you screw up, you make a mistake, someone tells you no, you still have the capacity to get back up and that's your own personal decision to make. Working in the NFT space and having quit a very traditional career in capital markets in order to go into blockchain, we get told we're insane more often than not. Eventually, I think we will be right. I think there's a fundamental way to build this tech. There's a fundamental way to work in an industry that very few understand. I think that's what the most interesting part of being an entrepreneur is. Now, I'm the founder of my second company now called On-Chain Listings. That's a mantra I try to live by. Just failure isn't final.

Sam Rust Yeah, it's one step along the path. Life is in many ways an evolution of moving from one thing to the next. You mentioned blockchain, Bitcoin. We're talking here, we're going to be crypto focused and how that crosses over into real estate. I wonder if we could just run through a couple of terms just to set the baseline at a real high level. You're going to hear us talk about Web3 a lot today for our audience. Could you define Web3, Bitcoin, and blockchain? I think Bitcoin and blockchain just differentiating because a lot of times people hear Bitcoin,

Ori Ohayon, they think of blockchain, and vice versa. The way I like to separate Bitcoin, blockchain, and even Web3 on a macro level is to look at Bitcoin as almost like the equivalent of a security. When you own assets, let's say on the stock market or in the real estate market, an equity is a share of a network. It's a percentage of something bigger and everyone's share is exactly the same. Bitcoin is just a percentage of a network and you're buying a share of that and you're buying a share of this macro sentiment towards the blockchain. That's obviously positively correlated to it. When you look at an NFT, it's a unique asset. Let's say the title or deed of ownership to a watch or a home or a painting or anything on those lines. That's what an NFT symbolizes, a unique asset. When you talk about blockchain, blockchain is simply the ledger that moves it across. A token is a duplicate of many different shares. An NFT is a unique asset. Then when you look at what Web3 is, it's basically a network or internet kind of tech that allows you to own your own data. When you put something out there, you can sell it and

Sam Rust track it using the blockchain as the ledger for that problem. Maybe give some real-world examples, if you could, of real-world ledgers because that word gets thrown out a lot in cryptocurrency, circles, and NFTs and all of that, hey, this is a ledger. To a lot of, I'll say, normal people, what is this ledger concept? People don't realize that it affects us on a day-to-day basis. What would be some examples of real-world ledgers that we interact with on maybe a daily or an annual basis?

Ori Ohayon The one I'm working on right now is basically land registries. Purchasing a property is obviously one of the biggest markets in the world. Real estate is essentially deeply decentralized. Every state, for example, in the US has a different land registry. A solution that blockchain could correct in the real world is to create a digital land registry where there's a uniform body that tracks and conducts those transactions on a net ledger. Essentially, it just creates a rule set. That's something I'm deeply interested in. OCL is trying to correct that industry and create a bunch of fixes for it. An NFT would have the power to conduct that transaction. The ledger tracks it, watches the provenance, does the title search on your behalf, checks if there is any liens against the property, for example, allowing users to conduct transactions within a 30-minute window versus a couple weeks, for example. In the way we conduct traditional transactions as is today, we're spending a ton of time and money on title searches, lien searches, verifying the condition reports on a property, verifying even if the owner that is trying to sell us the house is legit or if it's a title fraud case. By putting all that information on the blockchain, it's now all transparent. It's all been tracked there and it can't be cheated on. They can't be hacked. By doing so, let's say you come and try to sell your house to me, I can go on the blockchain or let's say the new equivalent of what an MLS would provide and I can actually verify that you, Sam, are the owner of this house. You've owned it for five years. You bought it at this price from this guy and I can track all the conditions since then versus now where I have to go find a title lawyer who's going to verify the land registry on my behalf where I have to pay a few hundred bucks to do that. Then once I want to submit my bid, I have to pay the land registry to get that title and then to conduct the transaction on it. That's something that NFTs essentially can conduct as is right now. The only issue is how do we regulate that? That's something we've been working on.

Sam Rust I've been hearing about this use case for a while now, maybe two or three years. I think it was one of the first bigger real-world problems that people identified that NFTs could solve, also sports tickets and some of those types of things. This is a big issue, adding transparency to land registries, simplifying the title process, that would be phenomenal. It's also very, very challenging because you have so many different stakeholders. You have individual regulation at a state level. It's a very complicated process with a lot of vested stakeholders and maintaining the status quo. To me, it seems like a little bit of a chicken and egg problem. You need some critical mass of people that are demanding that type of system, but how can you get that critical mass of consumers if you don't have the system in the first place? How are you guys going about solving

Ori Ohayon  that problem or trying to address those issues? What we've done is we actually, okay, so step one is we brought in a title lawyer as a partner. OCL is composed of five founders. One of our founders has a ton of experience dealing with land registries, closing statements, and all the traditional stuff that typically a guy like me wouldn't really know how to deal with. One of the main issues is obviously, as you mentioned, there are stakeholders in these transactions. Let's start with title brokers or real estate brokers and title and escrow lawyers. Those guys typically sit in the middle of most transactions and they hold most of the keys that are needed to close those transactions. What we did is we created what's kind of similar to a proof of work protocol where let's say you list your home for sale. You list your home for sale on Sotheby's Realty and now I see it as available for me to submit a bid on. Using blockchain, I can submit my bid and if you choose to accept it, the title will go into escrow and my bid will also go into escrow, my deposit amount, and the title lawyer and the real estate broker will now be able to log in and conduct the verification of that transaction. Very similar to what would be done on a Bitcoin transaction in order to verify it, basically by a miner. When those players come into the transaction and they verify it, they provide a digital sign-off and the title can now flow through and we can track that on the blockchain and then submit the land registry changes. By doing so, we can conduct a transaction significantly faster but also way cheaper because I'm not paying all those intermediaries for these quote-unquote miscellaneous expenses anymore. Would you anticipate that an ancillary effect of this would be to drop the cost of title insurance because it's going to be easier to ascertain what's on title? Totally. That's going to be something we're going to look at, absolutely. When you look at the insurance, one of the big things is obviously the legitimacy of the title and the condition of the title and so on. If we have a clean digital land registry that's immutable by definition, then when someone submits to you their title that's let's say an NFT or a smart contract, they can't fake it. Therefore, the insurance on that asset should be significantly cheaper. Those aren't conversations

Sam Rust we've started having yet but it's definitely something we're looking at. That would be a second order effect once you solve the first order problems. What's it going to take to roll this out? Is it going to take getting an entire state to buy off on this and move that way entirely or can a title company be formed that decides, hey, we're going to operate on the chain even if no one else is?

Ori Ohayon  The way we're building it and the way I want to make sure people adopt it is actually I want to make it a backend solution. I don't want people to actually have to interact with blockchain actively. That's been my thesis all along is I don't think blockchain is something meta masks, having to pay gas fees and all this stuff. I don't think people should have to deal with this, especially if you want mass adoption of any kind of technology. What we've done is it's an API tool. It feeds onto existing platforms. Brokers, title lawyers, and so on will be able to just log in and use the tools of blockchain to conduct their transactions. All we do is we're just feeding tech into the backend. By doing so, we only need to partner with brokers and really like lawyers and give them access to the tech so that they can put properties for sale through us on their own website. They're just using our API to verify the title. Then when the transaction goes through, the lawyers and the brokers just log in to sign off on it. It's as minimalistic and backend focused as possible. We only make money if the transaction saves money by using us. We've created a very simple business model that just promotes adoption really

Sam Rust. You're currently trying to develop a system that plugs in on the backside and pulls in transactions one at a time. You're not loading an entire land registry in, you're doing it transaction by transaction, embedding that through the use of NFTs and software in general, that you can drive those title searches faster and complete them more accurately and cheaper ultimately for everybody involved

Ori Ohayon  Exactly. Yeah, that's the goal. As we start at day one with new titles ideally or even older titles where we have to do the backend search, and then over time, we'll start back filling that information. But step one for us is let's start with new developments or bigger properties that have easy titles to find. We're also currently looking at a couple economies or countries that don't have clean land registries. We're looking to pilot OCL in those countries in order to create an original digital registry for them. Yeah, wipe the slate clean, begin afresh as it were, and do it right for the 21st century. And create a new standard. Exactly. Yeah. What would be a couple of countries that you guys are looking at exploring with the cloudy title process currently? One that would be really interesting for us is actually to go into the Ukraine. When things clean up, when infrastructure is in a position to be rebuilt there, the land registries are going to be demolished. There are going to be very few people who are going to actually have the original titles to their homes now. What we would like to do is go in and basically rebuild it for them. Show that we can find whatever historical data there is, recreate it, and then put it on the land registry that can transact way easier. And that's completely transparent to everyone. So that's a big case study for us. We're also looking at different countries in Asia to do this with Singapore, the Philippines, for example, Thailand. Their land registries have a lot of issues. By using something like this that has uniform rules, that follows a governing body's methodologies, we can clean up a lot. Yeah. What's one of the biggest objections that you get and how do you answer it? Honestly, we don't really get many objections. I think people are afraid of losing their jobs to something that automates their stuff, obviously. Our response to that is honestly quite simple. We're not getting rid of people's jobs or the need for licensing at all. And I don't think any tech, any platform really serves to do that. Even AI. It's not the people losing jobs. It's just you're making their job a lot faster. You're providing them with a tool that allows them to conduct those transactions. And you're just getting rid of a lot of grunt work. So for example, a title lawyer has to rewrite statements of closing and sale all the time. They probably do multiple things a day. Let's say they can conduct three a day at this point, and they charge, let's say, $2,000 a transaction. If I'm able to create a cookie cutter contract that is a statement of closing and sale, that auto fills in all the variables that the broker already had verified from the title or the land registry. And then all the lawyer has to do is log in, verify, make sure everything's up to date and sign off. I'm giving the lawyers the tools to conduct 20 transactions in a day at a fraction of the pace or the fraction of the time spent versus limiting themselves to three a day. So fine, they charge less per transaction, but they're conducting four to five times more. It's not that we're taking the fishing rod away from the fishermen. We're just giving them a way stronger one.

Sam Rust No. So it makes sense to me if you can get titles moved onto a blockchain, into a ledger, a digital ledger, that from then on, everything is much faster, much quicker, I mean, by an exponential factor. But bridging the gap from where we are today to the first time that title hits the ledger, that seems to me to be a really crucial step and the hardest piece of it all, because it, at least in theory, as I'm thinking about it, it's going to require the highest level of accuracy and your transitioning systems. And so how your business model seems to be predicated on the fact that you can make that transition on an individual title basis cleaner, smoother than a regular transaction leaving the title in the antiquated system. Am I thinking through that correctly? And how are you guys solving for those

Ori Ohayon  problems that'll occur in transitioning from one system to another? So, okay, so step one is we haven't, the way we've designed it is we're not stepping on the existing system's toes. We're creating something that can mirror it and conduct side by side to it without replacing one or the other. Right now, it's just an elegant way that's a little bit cheaper and we conduct the closing on your behalf. Longer term, what our goal is, is that it becomes like the gold standard of the preferred party to conduct these transactions, in which case we can start backfilling a lot more information. My goal is that we create something that's not invasive. Our biggest hurdle right now is VCs and institutional money are very reluctant to invest in anything that has blockchain on it. That's been the biggest pain in being an entrepreneur in this space. But when we found fantastic partners, we had really, really good co-founders, we found friends and family who were willing to fund it. As a result, we managed to get patented very early. We managed to get a bunch of pilot projects ready to go. So yes, the blockchain space took a massive hit. Adoption is not going to be simple, but we've created a tool that is as simple, elegant, and non-invasive as possible. So I think if we execute this correctly, we have something that could be revolutionary to

Sam Rust Proptech. And what do you think that window is? There were a lot of promises made. I'll go back to 2019 when the latest round of Cryptomania took hold and everything proliferated. It was no longer just BTC and Ethereum, but hey, there's all these different things and CryptoPunks and ROKs and all these different things hit the zeitgeist. And then it all washed away, or not all of it, but a lot of the hype washed away in 2022. Where are we at in the building cycle?

Ori Ohayon  So we've just got our patents approved a couple of weeks ago. We're already in very early stage developments now. We're basically closing funding for the final version of the product. I would say the first transactions can expect to be seen in six to eight months, and we've got pilots ready to start taking it on. So we're in pretty good form for that. There are many players out there who've stated they can conduct transactions on chains. And some of my partners and myself were part of that wave, and we saw a lot of this stuff happening very early on. Essentially what people were doing, which is really funny, is they were just making shell companies tied to the NFT, and they were transacting that NFT. So the shell company holding house one, two, three was able to move using the smart contract. But that wasn't a title transfer, that wasn't the land registry check. None of these components were a part of that process. So it never saved anyone money. We've created a product that's much more complicated, much more expensive to build, and it will take a bit longer to get to market. But because of that, I think it's got much more

Sam Rust capacity for innovation. Yeah. When you guys launch to market and you're ready for those first transactions in six months, what's your target market immediately? I mean, there's a ton of different types of transactions that happen within land registries. I would imagine that you've identified a segment or two that are most favorable for being flipped for one reason or

Ori Ohayon  another, which are those? So we're focusing on new residential construction. We're starting in Florida. We're doing the US as our primary target right now in terms of mass market. So we're starting with Florida, then we'll work our way into Colorado, and then most likely Texas. So once those states are done, then we'll look at what's the easiest to adopt next. Because essentially what we have is a smart contract that just needs to be tweaked based on the regulatory body. So we just need to figure out what makes the most sense and

Sam Rust what's the most cost effective for us to do. And new construction, I would imagine, because you can sell a developer on this concept and potentially have hundreds of transactions with the same counterparty on one side. And then Florida, Texas, and Colorado, because those states are relatively crypto friendly in their legislation or smart contract friendly,

Ori Ohayon  maybe would be a better way to put it. Yeah, that would be basically the benefit is also with new construction, all the titles are clean. The new construction building has an original plot that was on the registry, and then that was split up into, however, hundreds of units. So it makes it a lot easier for us to create clean titles based off of that versus backdating a 100 year old home and finding out every owner along the way. So that's the cleanest way to start a

Sam Rust new title. Depending on how educated someone is, you're going to get a lot of different hurdles or they'll perceive a lot of different risks. So there's people that would say, hey, the problem with the digital ledger is if you just unplug it, where is it going to live? And I think

Ori Ohayon, that's among the more ignorant. But when you look out at the landscape, what risk do you think is actually the biggest risk to this entire space taking off? I think the biggest risk is obviously going to be regulatory. If regulators shut us down and tell us we don't want to see this happening, or we don't want transactions occurring like this, then we've got issues. But we have been really careful the way we designed it so that it essentially conducts the transaction the same way it happens today, just through portals versus through paper and email. So that's a risk. Obviously, the second risk is going to be adoption if people are going to be willing to give this a shot. We don't think that's going to be an issue because we're saving everyone money, and we're giving royalties to our partners for letting us do that. So we're really treating people as partners, as friends and family. The way we work with people, you'll see when you meet my partners, we all work with people as if they are our relatives and we've known them for our whole life. So we really work based on trust and mutual benefit. We're not trying to sell people in some form of a scam. We've all been in blockchain since relatively early. We've seen those guys

Sam Rustplays these games, and that's definitely what interests us. What do you think the adoption curve looks like? Maybe an optimistic and a pessimistic view. You're on the building side. You obviously are optimistic about the space as a whole, or you wouldn't be here. But if you guys are six to eight months away from rolling out your first transactions, when will it be a real verifiable option for

Ori Ohayon,  the majority of folks who use a service like this in their area? Within the first year, we're hoping to be generating revenue to actually prove that we can conduct transactions on a mass scale. I think once we announce one of our lead partnerships, I think there will obviously be a fad of adoption because it will become a much more credible tool and it will be a little cheaper. And then we'll see. I think tech goes through waves. There's always going to be hurdles. There's definitely going to be regulatory hurdles for us to overcome. As is, I think, give us a year and you'll start seeing transactions occurring on chain. Say within five years, you'll start seeing regulators adopt it. And if regulators start to adopt it and the land registry starts to get digitized, then it will be everything. Then all real estate transactions will be occurring using a digital ledger. And then suddenly, real estate becomes like PropTech and real estate just becomes one and everything is occurring using the net. And that's when I think it becomes really fascinating.

Sam Rust Now, you're talking about a lot of bureaucracy in there as well. And historically, anything with that level of bureaucracy is one of the slowest to adopt new technology of any sort, let alone something as cutting edge as blockchain. So when you look at that point of mass adoption, are we five years away, 10 years away, 15 years away? What do you think?

Ori Ohayon It's at least five years before it even gets looked at on that scale. But the benefit is when you're looking at closing statements, for example, you have these miscellaneous legal fees, title search fees, they add up to let's say $2,000 transaction. We can cut that down by close to 50%. But when you start talking about title searches, lean searches, when you start talking about the land registry and cleaning all that up, you're talking about impacts on transactions between 10 to $20,000 in the US. So there's a massive, massive opportunity there to save people money and literally lower the barrier of entry into real estate. So there's a huge benefit and there's a socio economic impact that is actually quite big on this. Let alone the fact that you eradicate the need for paper and a transaction. So there are more than enough incentives to push for something like this to work. If the US is not the first to adopt it and we still have to take baby steps there, we're going to go into other economies that are going to be willing to help us adopt it. And if that means we go into the Ukraine as a post-war effort and we try to recreate their land registry, we'll do that. And the same thing with Asia, same thing with North America. We'll do it pretty much anywhere we can, but coming in from the top

Sam Rust and from a regulatory level. Well, fascinating conversation. I'm looking forward to tracking this space as builders like yourself continue to iterate, and continue to drive innovation forward. What's a daily, weekly habit that's contributed to your success to this point?

Ori Ohayon  One of my biggest routines is every day I start and I do my prayers in the morning and I say, thank you for everything I've been able to achieve and everything I'm trying to achieve going forward. And I think that teaches you a lot of mental resilience, right? Like that quote on my LinkedIn, Winston Churchill is one of my biggest, biggest idols in many ways. I've read a lot of his books. I've got all his quotes and sticky notes all over my desk. I think there's a quote by Winston Churchill that goes, success is what happens when you go from failure to failure of no loss of enthusiasm. And I truly believe in that. If you're able to take hits and be told no and fail more times and you can count, but refuse to stay down, I think you'll eventually get somewhere. And I truly believe in that. So I think having the mentality that Montraud knows how to say, thank you for my wins and my losses and step forward regardless, I think is a good way to go.

Sam Rust I appreciate you speaking to that. If folks want to learn more about what you're doing, want to track innovation in the space, how can they, where can they reach out to you?

Ori Ohayon  Where can they follow your progress? So I'm active on LinkedIn, Instagram, Twitter, Ory Ohayan, or you can find us at onchainlistings.com. Onchain listings on LinkedIn are very active. Yeah, just feel free to reach out. We're all open to having discussions

Sam Rust with anyone. Fantastic. Well, Ory, thank you for joining us. Thank you to our listeners for joining us. This has been another episode of the Real Estate Syndication Show. I'm your host, Sam Rust,

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